Employment lawyers have been waiting with baited breath for judgment from the Court of Appeal over whether agency workers can become employees of the agency’s client.

It has become increasingly common for organisations to employ agency workers. Some are not 'temps' at all and find themselves working in the same job for the same organisation for a number of years.

Mrs James worked at Greenwich Council for 5 years for 2 separate agencies. She changed agency to get a better wage but stayed in the same job at the Council. When the arrangement was terminated, she brought a claim for Unfair Dismissal against the Council, claiming that she was in fact their employee.

There have been a number of similar claims in recent years following comments in a previous case at the Court of Appeal that agency workers who remain in the same job for a significant time may become an employee of the agency’s client, giving them the right to claim Unfair Dismissal or a Redundancy payment when the arrangement is terminated.

However, the Court of Appeal in Mrs James’ case have now severely limited that possibility. They found that an agency worker will only be an employee of the agency’s client where it is necessary to imply a Contract of Employment to explain the working relationship. In most cases, it won’t be necessary at all: the working relationship is explained by the worker’s contract with the agency and the agency’s contract with their client. Mrs James was found not to be an employee.

So what does all of this mean? Essentially employers will now be able to employ agency workers without fear of them accruing rights to bring Unfair Dismissal and Redundancy claims provided that they make sure that they have an effective contract with the agency and the agency has a suitable contract with the worker. As lawyers will always advise you, it is best to have a written contract for any such arrangement. Given the potential for things to go badly wrong, it is well worth getting a solicitor to make sure that contract protects you.

Do watch this space. There is considerable political pressure for the regulation of agency workers. Campaigners are concerned that a second class of worker is developing, working through an agency for the same “employer” for a number of years but with many fewer rights than the employees amongst whom they work alongside. Legislation in this area is quite possible.